Some feel downturn's impact less than others

When Phil Prebor’s aircraft mechanic job flew away for the fifth time, he decided he had had enough.

“I realized that the only way I was going to have steady work or control my destiny was to work for myself,” said Prebor, who started a repair business in Peachtree City after he was laid off by Delta Air Lines in 1994.

Enlarge this image

Jason Getz/jgetz@ajc.com

Paul Prebor repairs termite damage to a chimney. Prebor and his brother Phil started their business, Routine Maintenance, after Phil was laid off by Delta Air Lines in 1994.

Enlarge this image

Jason Getz/jgetz@ajc.com

Phil Prebor (left) works with his brother Paul on a repair last week in Peachtree City. The brothers’ business started experiencing the first slowdown in its 14-year history after the federal bailout won approval, Phil Prebor says, but it still hasn’t come to a halt.

Latest Headlines:

• More business news
• Business photo galleries

After two weeks of handing out fliers and knocking on doors, Prebor knew he and his new business, Routine Maintenance, could prosper by fixing folks’ cars, homes, airplanes or whatever.

Fourteen years later, Prebor is still confident that the five-employee repair business that he co-owns with his brother will do OK.

But for the first time, he’s seeing a downturn in his business. Big jobs such as remodeling kitchens and basements have dropped off severely. Even customer calls for small jobs such as fixing leaky roofs and drywall damage have slowed some, he said.

“Since the announcement of the [federal government’s] bailout, that’s come to — I don’t want to call it a screaming halt — but it’s slowed down,” Prebor said. “In my 14 years in this business, this is the first time I’ve seen people taken aback [by the economy].”

In another sign of the severity of the current downturn, some businesses that economists call “countercyclical” because they usually hold up well in recessions are now struggling as well. The credit crunch has made it difficult for students to finance college tuition, for instance, while plunging consumer confidence is also trimming sales at many discount stores.

So far, however, those and other job sectors, such as health care, accounting and education, are still holding up better than overall employment in the state. They usually do better than most of the economy in a downturn because they offer services and products that fill essential needs, provide cheaper alternatives or ways to retool for new careers.

For instance, even as nonfarm employment in the state declined 1.5 percent during the 12 months through October, repair and maintenance-related jobs grew by 1.6 percent and education services rose 4.4 percent, according to Georgia Department of Labor figures. One sign of the slowdown, however: Repair and maintenance businesses lost jobs in October, reversing recent growth.

Several countercyclical sectors continued to grow in October.

“We are seeing people return to school,” said Pamela Harroff, president of DeVry University/Georgia in Decatur. “Our enrollments are strong,” she said, partly because people who are worried about their jobs or have lost them are seeking new training.

She said the school’s technology training programs and undergraduate and graduate degrees in business are in heavy demand. The institution, which is part of DeVry Inc., a publicly traded company based in Oakbrook Terrace, Ill., has about 5,000 students in metro Atlanta.

Likewise, Brown Mackie College, another private college for career-minded students in Dunwoody with about 700 students, usually sees a surge in enrollment during a recession, said Sonya Jarbiel, director of admissions.

“When the economy is bad, it’s not a bad thing for us,” she said. “People want to go to school because they want to be prepared when the economy comes back.”

Those countercyclical trends are reflected on Wall Street. DeVry’s shares are down only 3 percent this year, and discounter Wal-Mart’s are up about 10 percent. Meanwhile, the Dow Jones industrial average is down about 40 percent, and shares of upscale retailer Saks Fifth Avenue, which is bleeding sales to lower-priced competitors, are down 85 percent.

Still, there are cracks in the defenses of supposedly recession-proof employers.

They’re “not insulated totally,” Mercer University economist Roger Tutterow said. Most countercyclical employers will shed some jobs in the expected recession.

For instance, Wal-Mart may gain sales from customers who previously shopped at Saks Fifth Avenue, but it may lose more sales as other customers pinch pennies. Auto repair businesses gain customers who choose to fix their old cars rather than buying new ones, Tutterow added. But they also lose cash-strapped customers who put off fixing dented fenders and other nonessential repairs.

The cash crunch is also likely to catch educational institutions in a crossfire, he said. Universities and professional schools may recruit dislocated workers as new students, but government-supported schools may also have to cut jobs because of dwindling tax revenues.

Meanwhile, students at public and private institutions are having a harder time financing their educations.

“A lot of our lenders have been pulling out because credit is a big issue,” said Jabriel, at Brown Mackie College. She said student applications recently have dropped by more than a third as a result.

“Over the last four months, things have tightened for us,” she said.